Correlation Between Energy Vault and Brookfield Renewable

Can any of the company-specific risk be diversified away by investing in both Energy Vault and Brookfield Renewable at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Energy Vault and Brookfield Renewable into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Energy Vault Holdings and Brookfield Renewable Corp, you can compare the effects of market volatilities on Energy Vault and Brookfield Renewable and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Energy Vault with a short position of Brookfield Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Vault and Brookfield Renewable.

Diversification Opportunities for Energy Vault and Brookfield Renewable

0.34

Correlation Coefficient

Energy Vault  Brookfield Renewable

Weak diversification

The 3 months correlation between Energy and Brookfield is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Energy Vault Holdings and Brookfield Renewable Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Renewable Corp and Energy Vault is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Energy Vault Holdings are associated (or correlated) with Brookfield Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Renewable Corp has no effect on the direction of Energy Vault i.e., Energy Vault and Brookfield Renewable go up and down completely randomly.

Pair Corralation between Energy Vault and Brookfield Renewable

Given the investment horizon of 90 days Energy Vault Holdings is expected to under-perform the Brookfield Renewable. In addition to that, Energy Vault is 5.06 times more volatile than Brookfield Renewable Corp. It trades about -0.03 of its total potential returns per unit of risk. Brookfield Renewable Corp is currently generating about -0.03 per unit of volatility. If you would invest  3,026  in Brookfield Renewable Corp on September 10, 2024 and sell it today you would lose (52.00) from holding Brookfield Renewable Corp or give up 1.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Energy Vault Holdings  vs.  Brookfield Renewable Corp

Energy Vault Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Vault Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Energy Vault showed solid returns over the last few months and may actually be approaching a breakup point.

Brookfield Renewable Corp

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Renewable Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Brookfield Renewable may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Energy Vault and Brookfield Renewable

The main advantage of trading using opposite Energy Vault and Brookfield Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Vault position performs unexpectedly, Brookfield Renewable can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Brookfield Renewable will offset losses from the drop in Brookfield Renewable's long position.

The idea behind Energy Vault Holdings and Brookfield Renewable Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stocks Directory module to find actively traded stocks across global markets.